On 22 January 2018, the International Monetary Fund revised upwards its forecast for global economic growth in 2018 and 2019, pointing out that US tax cuts would boost investment in the world’s largest economy and help its major trading partners. Tax reform in the US could drive up the global economic growth rate to 3.9 percent.
The IMF has raised the growth forecast for the US from 2.3 percent to 2.7 percent in 2018 and from 1.9 percent to 2.5 percent in 2019. Overall, the reforms are expected to contribute 1.2 percent of total US GDP by 2020. The IMF noted that lowering corporation tax rates and the temporary allowance for full expensing of equipment as key elements contributing to the improved growth expectations. The tax reforms and related fiscal stimulus should also have a positive impact on US trading partners, notably Canada and Mexico, who may see a “positive demand spillover”.
US President Donald Trump signed a $ 1.5 trillion Republican tax reform in December, consolidating his first legislative victory in the country.
